Answer:
They would need to buy $64,068.981 in U.S treasury bonds on Ava's second birthday to ultimately provide $120,000 for college expenses in 16 years.
Explanation:
The initial amount to be invested in order to yield $120,000 after 16 years can be expressed as;
F.V=P.V(1+R)^n
where;
F.V=future value of investment
P.V=present value of investment
R=annual interest rate
n=number of years
In our case;
F.V=$120,000
P.V=unknown
R=4%=4/100=0.04
n=16 years
replacing;
120,000=P.V(1+0.04)^(16)
120,000=P.V(1.04)^16
120,000=1.873 P.V
P.V=120,000/1.873
P.V=$64,068.981
They would need to buy $64,068.981 in U.S treasury bonds on Ava's second birthday to ultimately provide $120,000 for college expenses in 16 years.
Answer:
arithmetic average growth rate = (4% + 3.37% + 5.12% + 3.1%) / 4 = 3.9%
we need to find the required rate or return (RRR) in the following formula:
stock price = expected dividend / (RRR - growth rate)
- expected dividend = $2.33 x 1.039 = $2.42
- stock price = $55
- growth rate = 0.039
55 = 2.42 / (RRR - 0.039)
RRR - 0.039 = 2.42 / 55 = 0.044
RRR = 0.083 = 8.3%
geometric average growth rate = [(1.04 x 1.0337 x 1.0512 x 1.031)¹/⁴] - 1 = 3.89%
again we need to find the required rate or return (RRR) in the following formula:
stock price = expected dividend / (RRR - growth rate)
- expected dividend = $2.33 x 1.0389 = $2.42
- stock price = $55
- growth rate = 0.0389
55 = 2.42 / (RRR - 0.0389)
RRR - 0.0389 = 2.42 / 55 = 0.044
RRR = 0.0829 = 8.29%
Answer:
$100 favorable
Explanation:
The computation of the material purchase price variance is shown below:
= Actual Quantity purchased × (Standard Price - Actual Price)
= 2,000 pounds × ($1.60 - $1.55)
= 2,000 pounds × $0.05
= $100 favorable
Simply we took the difference between the standard and the actual price, and then multiply it by the actual quantity purchased
Answer and Explanation:
The computation of the unit cost of goods manufactured is shown below:
<u>Particulars variable costing absorption costing</u>
variable cost of $108 $108
goods manufactured ($1,620,000 ÷ 15,000)
Fixed manufacturing
cost $14
($210,000 ÷ 15,000)
unit cost of goods
manufactured $108 $122
Answer:
Bank A should be chosen.
Explanation:
Given:
Effective annual rate (EAR) of bank A = 10%
Bank B pays 9% compounded daily. EAR of bank B is calculated below:
EAR = 
Where, i is 0.09
n is compounding period that is 365 (since it is compounded daily)
EAR = 
= 1.0942 - 1
= 0.0942 or 9.42%
Bank B pays EAR of 9.42%
Based on EAR, Bank A should be selected as it pays higher EAR of 10%.
